[For Information Purpose Only.
The Japanese language press release should be referred to as the original.]
May 28, 2019
To All Concerned Parties
Name of REIT Issuer:
Invincible Investment Corporation
Naoki Fukuda, Executive Director(Securities code:8963)
Asset manager:
Consonant Investment Management Co., Ltd.
Naoki Fukuda, CEOContact: Jun Komo
General Manager of Planning Department(Tel. +81-3-5411-2731)

Notice concerning Revision of Forecast of Financial Results and Distribution
for the 32nd Fiscal Period Ending June 2019As a result of the expected gain on sale from the disposition of Royal Parks Tower Minami-Senju,
Invincible Investment Corporation (“INV”) is announcing the updated forecasts of financial results
and distribution per unit (“DPU”) for the fiscal period ending June 2019 (32nd Fiscal Period). The
updated forecasts are based on the actual operating results for the January to April 2019 period
and forecasted operating results for May and June 2019.
1.

Revision of forecasts of financial results and DPU for the fiscal period ending June 2019 (fromJanuary 1, 2019 to June 30, 2019 )Total
Distribution
AmountOperating
Revenues

Operating
IncomeOrdinary
Income

JPY million

JPY million

JPY million

JPY million

JPY million

21,514

16,233

15,31815,318

8,964

Revised forecast (B)JPY million
27,319

JPY million
22,124

JPY million
21,210

JPY million
21,209

JPY million

Amount of variance(B) – (A)JPY million
5,804

JPY million
5,891

JPY million
5,891

JPY million
5,891

JPY million

Rate of variance((B) – (A)) / (A)

%

%

%

%

%

27.0

36.3

38.5

38.5

4.7

Previous forecast (A)(announced on
May 17, 2019)

Net Income

9,384
419

This English language notice is a translation of the Japanese-language notice released on May 28, 2019 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution
readers to undertake investment decisions based on their own investigation and responsibility.
This translation of the original
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

1

JPY

JPY

JPY

Distribution
per Unit(Including
Excess Profit
Distribution
per Unit)(Note)
JPY

2,703

1,582

-

1,582

JPY

JPY

JPY

JPY

3,742

1,656

-

1,656

JPY

JPY

JPY

JPY

1,039

74

-

74

%

%

%

%

38.4

4.7

-

4.7

Earnings per
Unit(Note)

Distribution
per Unit(Excluding
Excess Profit
Distribution
per Unit)

Excess Profit
Distribution
per Unit(Note)(Note)

Previous forecast (A)(announced on
May 17, 2019)
Revised forecast (B)Amount of variance(B) – (A)Rate of variance((B) – (A)) / (A)(Note)The number of investment units issued and outstanding at the end of the fiscal period: 5,666,840 units.

(Reference)
Assumptions underlying the forecast of financial results and distributions for the fiscal period ending
June 2019 are provided in Appendix 1.

2.

Reasons for the revision and disclosure of forecast of financial results and DPU

INV is revising its forecasts of financial results and distribution for the fiscal period ending June
2019, as the operating revenue and net income for the fiscal period ending June 2019 are expected
to increase by 10% and 30% or more, respectively, from the previous forecasts announced in“Notice concerning Revision of Forecast of Financial Results for the 32nd Fiscal Period Ending
June 2019” dated May 17, 2019 due to an expected gain on sale1 of JPY 5.5 billion from the sale ofRoyal Parks Tower Minami-Senju (the “Property”) as announced in the press release “Noticeconcerning Sale of Domestic Trust Beneficiary Interest” dated today. INV plans to retain
substantially all of the sale proceeds in order to acquire additional assets in the future. While theclosing of sale of the Property is expected to occur on June 7, 2019, INV plans to pay out dividends
as if the Property was held through June 30, 2019.
In addition, as announced in “Performance Update for April 2019” dated May 27, 2019, INV’s hotel
and residential portfolios have been performing well. Overall portfolio NOI is up 3.6% fromJanuary through April 2019 compared to the same period in 2018. The overall hotel portfolio
recorded a cumulative 5.6% RevPAR growth for the January through April 2019 period compared tothe same period in 2018. Both the domestic hotels and the overseas hotels experienced strong
RevPAR growth with the domestic hotels recording a 3.0% increase and the overseas hotels
recording a 17.4% RevPAR growth, both for the January through April 2019 period compared tosame period in 2018. Please refer to “Performance Update for April 2019” dated May 27, 2019 forThis English language notice is a translation of the Japanese-language notice released on May 28, 2019 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution
readers to undertake investment decisions based on their own investigation and responsibility.
This translation of the original
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

2the details of the hotel KPIs including the definitions and calculation method thereof2.
INV is planning to payout a dividend for the fiscal period ending June 2019 based only on theoperating results of its properties and not including any gain on sale of properties. With the
improved performance, INV expects the DPU for the fiscal period ending June 2019 to be JPY 1,656,
which is 4.7% higher than the previous guidance and 15.8% higher than the actual DPU in the same
fiscal period last year.
Finally, mainly due to the fact that the gain from sale of the Property will be retained by INV, thedistribution payout ratio will not be large enough to fulfill the tax conduit requirement3 of paying out
at least 90% of net distributable income as dividends. However, INV has tax-loss carry forwards inthe amount of JPY 22.6 billion (mainly arising out of disposition of the assets in December 2010
fiscal period) which is more than enough to fully offset the expected taxable income. As a result,
INV does not expect to be required to pay any income taxes for the fiscal period ending June 2019.
(Note 1) Expected gain on sale is calculated by deducting the estimated transfer related cost and is an
estimate as of today, and is subject to change.
(Note 2) The RevPAR of the overall hotel portfolio (the domestic hotel portfolio and the overseas hotels) is aweighted average rate of the RevPAR of the domestic hotel portfolio and the RevPAR of theoverseas hotels stated in such press release based on the aggregate number of rooms (rooms x
number of days).
(Note 3) Investment corporations under the J-REIT system can deduct the amount of cash distributions in
calculating its taxable income as long as they satisfy certain conditions (conduit requirements), in
order to prevent double taxation between J-REIT and unitholders.

Website of INV: http://www.invincible-inv.co.jp/eng/

This English language notice is a translation of the Japanese-language notice released on May 28, 2019 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution
readers to undertake investment decisions based on their own investigation and responsibility.
This translation of the original
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

3

(Appendix 1)<Assumptions Underlying the Forecast of Financial Results and Distribution for
the June 2019 Fiscal Period>
Item

Assumptions

Fiscal period

The June 2019 fiscal period: from January 1, 2019 to June 30, 2019 (181 days)

Assets undermanagement

Based on the properties held as of the date of this document (131 properties and apreferred equity interest in one TMK), INV assumes the transfers of Royal Parks Tower
Minami-Senju on June 7, 2019 and Spacia Ebisu on June 19, 2019, and that there will
be no other changes through the end of the fiscal period ending June 30, 2019.

As of the end of the June 2019 fiscal period: 5,666,840 units
Units outstanding

INV assumes that there will be no change to the 5,666,840 units issued and outstanding
as of today through the end of the fiscal period ending June 30, 2019.

Balance as of the end of the fiscal period ending June 30, 2019: JPY 229,873 million(borrowing: JPY 225,873 million, investment corporation bonds: JPY 4,000 million)
Interest-bearing liabilities

INV assumes that out of the debt balance of JPY 229,873 million as of today, regarding
the loans maturing during the June 2019 fiscal period, INV will refinance such loans on
similar terms. INV assumes no other new loan or prepayment of loans through the endof the June 2019 fiscal period.

This English language notice is a translation of the Japanese-language notice released on May 28, 2019 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution
readers to undertake investment decisions based on their own investigation and responsibility.
This translation of the original
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

4

Item

Assumptions
INV expects to record operating revenues as follows:
June 2019
Fiscal Period
JPY 12,210 million(JPY 8,562 million)(JPY 4,168 million)(JPY 4,394 million)

・Rental revenues(of these, hotel rents)(fixed hotel rents)(variable hotel rents)
・Management contract
revenue
・TMK Dividend amount・TK Dividend amount・Gain on sale
Total operating revenues

Operating revenues

JPY 569 million
JPY 800 million
JPY 2,606 million
JPY 11,132 million
JPY 27,319 million

We estimate the amount of dividends on the preferred equity interests (TMK dividend)
based on the performance of the underlying asset and the assumed amount ofexpenses incurred by the TMK.
Due to the investment structure change (the “Structure Change”) implemented withregard to the two Cayman hotels as announced in the press release “Notice concerning
Change of Investment Structure regarding Overseas Assets” dated May 9, 2019, INV
receives revenue from the Cayman Hotels as TK dividend until May 9, 2019 andrecognizes management contract revenue from the Cayman Hotels on and after May
10, 2019. The forecasts of TK dividend and management contract revenue are basedon estimated performance of the underlying assets and the assumed amount ofexpenses incurred by the TK operator or the hotel management company. TK dividend
and management contract revenue have been calculated based on the exchange rate of
1 USD = 110.00 JPY, as the exchange rate is fixed based on the currency put/call
options, covering approximately 85% of expected cash flow.
Rental revenues are calculated based on estimates as of the date of this document. In
addition, INV assumes there will be no delinquencies or non-payment of rent by tenants.

This English language notice is a translation of the Japanese-language notice released on May 28, 2019 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution
readers to undertake investment decisions based on their own investigation and responsibility.
This translation of the original
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

5

Item

Assumptions
INV expects to incur property related expenses and management contract expenses outof operating expenses as follows:・Facility management fees(of these, repair costs)
・Taxes and other public charges(Note)
・Insurance expenses
・Depreciation expenses

Operating expenses

June 2019
Fiscal Period
JPY 632 million(JPY 25 million)
JPY 545 million
JPY 51 million
JPY 3,256 million

・Other expenses
Total property related expenses
and management contract
expenses

JPY 193 million
JPY 4,679 million(Note) Property taxes and city planning taxes on the assets acquired in 2018 are
calculated on a pro-rata basis with the previous owners and settled at the time ofacquisition, and are not recorded for the fiscal period ended December 31, 2018 and will
be recorded from the fiscal period ending June 30, 2019 as the amount equivalent tosuch settlement is included in the acquisition cost.
INV expects to incur other operating expenses other than the property related expenses
or management contract expenses as follows:
June 2019
Fiscal Period
JPY 515 million

・Other operating expenses(of these, asset management
fees)(JPY 300 million)

INV expects to record net operating income as follows:

・NOI

June 2019
Fiscal Period
JPY 14,764 million(of these, domestic hotel NOI)(JPY 8,122 million)(of these, overseas hotel NOI)(JPY 532 million)(of these, residential NOI)NOI(JPY 2,517 million)(of these, TMK dividend amount)(JPY 800 million)(of these, TK dividend amount)(JPY 2,606 million)

NOI calculation method in the above table is as follows(up to May 9, 2019)
・NOI＝ Rental Revenues ‐ Property Related Expenses + Depreciation Expenses +Dividend on the preferred equity interest (TMK dividend) + Dividend on TK interest (TK
dividend)(on and after May 10, 2019)
・NOI＝ Rental Revenues ‐ Property Related Expenses + Depreciation Expenses +Dividend on the preferred equity interest (TMK dividend) + (Management Contract
Revenue ‐Management Contract Expense)

This English language notice is a translation of the Japanese-language notice released on May 28, 2019 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution
readers to undertake investment decisions based on their own investigation and responsibility.
This translation of the original
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

6

Item

Assumptions
INV expects to incur non-operating expenses as follows:

Non-operating expenses

Distribution per unit

・Interest expense
・Finance related costs・Interest for investment corporation
bonds
・Depreciation of investment
corporation bonds issuance
expenses
Total non-operating expenses

June 2019
Fiscal Period
JPY 600 million
JPY 298 million
JPY 11 million
JPY 3 million
JPY 914 million

The distribution per unit is calculated in accordance with the cash distribution policy as
set forth in INV’s Articles of Incorporation.
With respect to the distribution for the fiscal period ending June 30, 2019, INV expects todistribute an aggregate amount of JPY 9,384 million (distribution per unit: JPY 1,656),
after reserving JPY 11,825 million, a portion of the increase in net income due to the
Structure Change and the sale of Royal Parks Tower Minami-Senju and Spacia Ebisu,
from the net income for the fiscal period ending June 30, 2019 in the amount of JPY
21,209 million).
For the fiscal period ending June 30, 2019, INV expects to record deferred gain on
hedge of the interest rate swap and the currency option as the valuation and conversion
adjustments, etc. of JPY 108 million, which is equal to the amount for the fiscal period
ended December 31, 2018. The distribution per unit is calculated based on theassumption that fluctuation of the market value of the interest rate swap does not affectthe distribution per unit.
Distribution per unit may vary due to various factors, including changes of the assets
under management, fluctuation of rent income associated with reasons such as changeof tenants and occurrences of unexpected repairs.

This English language notice is a translation of the Japanese-language notice released on May 28, 2019 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution
readers to undertake investment decisions based on their own investigation and responsibility.
This translation of the original
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

7

Item

Excess profit distribution
per unit

Assumptions
INV believes maintaining the stability of cash distributions over the medium term is oneof the most important factors in determining the amount of distribution for a given fiscal
period, and therefore, INV has adopted the policy to make distributions in excess of
profits in order to stabilize distributions, in cases where dilution of investment units orsignificant expenses are to be recorded in connection with, among other things, theacquisition of assets or the raising of capital, leading to a temporary decrease in
distribution per unit, taking into consideration the level of distribution per unit assuming
such acquisition of assets or capital raising had contributed for a full fiscal period.
INV may also consider making distributions in excess of profits for the purpose of
decreasing the impact from corporate tax increase arising from different rules in tax andaccounting practices, such as treatment on depreciation of fixed term land lease or asset
retirement obligation.
INV will not make distribution in excess of profits for the fiscal period ending June 30,
2019, as INV intends to retain a certain amount of the net income.

Excess profit distribution per unit

Other

June 2019
Fiscal Period-

INV assumes there will be no amendments to applicable laws and regulations, thetaxation system, accounting standards and other regulations.
On April 1, 2019, an amended Act on Special Measures Concerning Taxation wasenacted in Japan that amends the requirement that “a J-REIT must not hold 50% ormore of the shares or investment in another corporation” by expanding the regulation to
include investments in anonymous associations (tokumei kumiai or TK). By
implementing the Structure Change, INV expects to comply with the tax conduit
requirement in the fiscal period ending December 2019, which commences after theeffective date of the amended Act on Special Measures Concerning Taxation and the
new regulation is applicable.
In addition, INV assumes there will be no unforeseen material changes in general
economic trends, real estate market conditions and other trends and conditions.

This English language notice is a translation of the Japanese-language notice released on May 28, 2019 and was prepared solely for theconvenience of, and reference by, non-Japanese investors. It is not intended as an inducement or solicitation for investment. We caution
readers to undertake investment decisions based on their own investigation and responsibility.
This translation of the original
Japanese-language notice is provided for informational purposes only, and no warranties or assurances are given regarding the accuracy orcompleteness of this English translation. Readers are advised to read the original Japanese-language notice. In the event of any discrepancy
between this translation and the Japanese original, the latter shall prevail in all respects.

8